Australia is set to see its resources and energy export earnings leap by 7% to a record A$450 billion ($290 billion) this fiscal year.
The surge in revenues has been boosted by soaring coal and gas prices in the wake of Western sanctions on Russia, following its invasion of Ukraine, the Australian government said on Tuesday.
The country is set to see strong growth in revenue from exports of liquefied natural gas (LNG) as well as thermal coal used in power plants, the Department of Industry, Science and Resources said in a quarterly report.
That will offset declines in top export earner iron ore and metallurgical coal due to a downturn in steel making.
Thermal coal export revenue is expected to surge 35% to A$62 billion in the year to June 2023, overtaking revenue from metallurgical coal, forecast at A$58 billion.
“It is expected that thermal coal prices will remain above metallurgical coal prices for some time — an unprecedented situation — and likely enduring while steel demand remains low and energy shortages persist,” the report said.
It added that prices could climb even more than expected as wetter-than-normal conditions over the Australian summer may hamper supply.
Australian coal has increasingly headed to Europe instead of India since mid-2022 after European sanctions were imposed on Russian coal for its invasion of Ukraine, the government said. Cost-sensitive Indian buyers are turning to cheaper Russian and Indonesian supply.
Soaring Europe Gas Prices
LNG exports are expected to fetch A$90 billion this fiscal year, up 29% on last year, on soaring prices as Europe scrambles to find gas to replace supply from Russia.
“Australia’s higher forecast earnings will be transient if Russia restores European gas flows. But should the flows continue to fall, earnings could rise higher,” the report said.
Lithium export revenue is expected to nearly triple to A$14 billion, buoyed by 16% growth in output and soaring prices as demand for the metal used in electric vehicle batteries grows.
The buoyant forecast is also being helped by the US dollar’s surge against the Australian dollar, as the country’s key commodities are all priced in US dollars.
- Reuters with additional editing by Sean O’Meara